SEC Begins New Fiscal Year with Multiple Whistleblower Awards
The 2021 fiscal year was a record year for the Securities and Exchange Commission (SEC) Whistleblower Program. The agency awarded over $500 million to over 100 individuals, figures approximately three times the size of previous fiscal year records. Since the 2022 fiscal year began on October 1, 2021, the SEC has continued this momentum and has already issued four whistleblower awards.
Through the SEC Whistleblower Program, qualified whistleblowers are entitled to awards of 10-30% of the funds recovered by the government in connection to their disclosure. The SEC also provides confidentiality protections to whistleblowers and thus does not reveal any identifying information about award recipients.
On October 1, the SEC issued a $1.7 million award to a whistleblower who voluntarily provided the agency with original information that led to a successful enforcement action. According to the award order, the whistleblower “provided new, detailed, and highly valuable information that prompted the opening of the investigation and provided substantial assistance during the course of the investigation.” The whistleblower’s information and assistance helped the SEC return millions of dollars to harmed investors.
On October 8, the SEC issued two whistleblower awards. The first award was for approximately $100,000. The award was issued to a whistleblower who “provided important new information that prompted Commission staff to open an investigation into the alleged misconduct,” according to the award order. The order also notes that the whistleblower provided further assistance during the investigation which “saved Commission time and resources.”
The second order grants a maximum 30% award to a whistleblower. According to the order, there have been no collections to date in connection with the relevant enforcement action, so the monetary amount of the award is still to be determined. The SEC decided the award would be for 30% by following a 2020 rule which sets a presumption that awards will be for the statutory maximum when the maximum award would not exceed $5 million and when there are no negative factors present. The award order notes that the whistleblower “alerted the Commission to an on-going fraud prompting the opening of the investigation, participated in multiple voluntary interviews with Commission staff, and provided numerous documents that assisted the staff in its investigation, saving Commission staff time and resources.”
On October 12, the SEC issued a whistleblower award for approximately $1.3 million. According to the award order, the whistleblower “provided significant information that prompted the opening of the investigation by the Commission staff, participated in multiple interviews with Commission staff, and continued to provide helpful information over a two year period.”
Overall, since issuing its first award in 2012, the SEC has awarded over $1 billion to over 200 whistleblowers. It is recommended that individuals considering blowing the whistle to the SEC first consult with an experienced SEC whistleblower attorney to ensure that they are fully protected and qualify for the largest award possible.
Geoff Schweller also contributed to this article.